Wednesday

29th Mar 2023

Austerity measures destroying EU social model: report

Austerity measures meant to pull Europe out of the crisis have put some 800,000 children into poverty.

The findings, among others, are detailed in a 357-page World Social Protection report out Tuesday (3 June) by the Geneva-based UN agency, the International Labour Organisation (ILO).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • 6.6 million more people at risk of poverty or social exclusion today when compared to 2008 (Photo: EUobserver)

“The achievements of the European social model, which dramatically reduced poverty and promoted prosperity in the period following the Second World War, have been eroded by short-term adjustment reforms,” notes the report.

The report argues that fiscal consolidation meant to reduce debt has failed to stimulate the kind of economic growth needed to create jobs.

It notes that maintaining social protection not only reduces poverty but also stimulates growth by boosting the health of the vulnerable, increasing their productivity, and by extension props up domestic demand.

The report says that families in austerity-driven nations like Ireland, Cyprus, Greece, and Portugal have seen their disposable incomes plummet, leading to lower consumption.

In Greece, salaries dropped 35 percent since 2008 while unemployment increased by 28 percent. At the same time, social security reforms are being replaced with a system that limits the responsibility of the Greek state.

For comparison, the ILO estimates poverty rates in Finland in 2010 would have been over 30 percent, as opposed to around 7 percent, had the government slashed social protection transfers to those in need.

The ILO notes some structural reforms imposed on governments are designed to streamline administration.

But the emphasis, it says, has been disproportionally placed on the fiscal objective of balancing public budgets “without due consideration to the objective of adequate benefits to all people”.

Europe’s solution to the crisis for the past five years has instead given rise to persistent unemployment, lower wages and higher taxes.

All three have boosted poverty and social exclusion rates, which now affects some 123 million people or 24 percent of the EU population.

Before the start of the crisis in 2008, the figure was 116 million. Today, around 800,000 more children now live in poverty compared to five years ago.

“Some estimates foresee an additional 15-25 million people facing the prospect of living in poverty by 2025 if fiscal consolidation continues,” warns the ILO.

The European Commission, for its part, notes unemployment has increased to close to 26 million.

It says 5.3 million young people are jobless and around half of the unemployed have been without a job for more than a year.

“Although there are some signs of economic recovery, it remains slow; it is still very fragile; and it is uneven throughout the EU,” EU employment commissioner Laszlo Andor said Monday.

Andor says nearly a quarter of the population is still considered at risk of poverty or social exclusion.

EU warns France on budget efforts

France must take further action to cut its budget deficit to the EU's 3 percent limit in its upcoming emergency budget law, in a stark warning from the European Commission.

Inequality reduces economic growth, OECD says

Rising income inequality has cost European economies up to 10 percent in lost economic output over the past twenty years, according to a new report by the bloc's leading economic thinktank.

Opinion

Biden's 'democracy summit' poses questions for EU identity

From the perspective of international relations, the EU is a rare bird indeed. Theoretically speaking it cannot even exist. The charter of the United Nations, which underlies the current system of global governance, distinguishes between states and organisations of states.

Opinion

Turkey's election — the Erdoğan vs Kılıçdaroğlu showdown

Turkey goes to the polls in May for both a new parliament and new president, after incumbent Recep Tayyip Erdoğan decided against a post-earthquake postponement. The parliamentary outcome is easy to predict — the presidential one less so.

Latest News

  1. The overlooked 'crimes against children' ICC arrest warrant
  2. EU approves 2035 phaseout of polluting cars and vans
  3. New measures to shield the EU against money laundering
  4. What does China really want? Perhaps we could try asking
  5. Dear EU, the science is clear: burning wood for energy is bad
  6. Biden's 'democracy summit' poses questions for EU identity
  7. Finnish elections and Hungary's Nato vote in focus This WEEK
  8. EU's new critical raw materials act could be a recipe for conflict

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us